The National Insurance Commission (NAICOM) has unveiled the Insurance Policyholders’ Protection Fund (IPPF), mandating all insurance and reinsurance companies to contribute to the scheme as part of efforts to safeguard policyholders and strengthen industry stability.www

Under the new directive, insurers are required to remit 0.25 per cent of their net premium income annually into the Fund, with the Commission warning that failure to comply within stipulated timelines could attract sanctions, including suspension or cancellation of operating licences.

The IPPF is to be used for resolving distress and insolvencies of licensed insurers or reinsurer and payment of claims due to insolvency or cancellation of the licence of the insurer or reinsurer.

In a circular issued yesterday, titled “Guidelines for the Collection, Management, and Administration of the Insurance Policyholders’ Protection Fund” NAICOM stated that the collection and payment of contributions into the Fund commenced with effect from the date the Nigeria Insurance Industry Recapitalisation Act, NIIRA, 2025 was signed into law by the President.

The circular stated: “The collection and payment of contributions into the Fund commenced with effect from the date the NIIRA 2025 was signed into law by the President (i.e. 31st July 2025).

“An insurer/reinsurer shall contribute 0.25% of its net premium income annually to the Fund. For this purpose, net premium income shall be the gross written premium less brokerage commission.

“An insurer or reinsurer shall submit to the Commission an IPPF Assessment Returns on or before 31st March of each year indicating the gross written premium and brokerage commission in a prescribed format in respect of assessment period. The Commission shall contribute 0.25% of the balance in the Security and Insurance Development Fund as at 31 December of the preceding year to the Fund.

“Notwithstanding the 0.25% contribution from SIDF, the Commission may provide additional contribution to the Fund as loan, where necessary, to achieve the objective of the Fund. The additional contribution shall be recouped from future contributions that may be due from the SIDF.

“The Fund means the Insurance Policyholders Protection Fund into which shall be paid 0.25% of the gross premium income of every insurer and reinsurer and 0.25% of the balance standing in the Security and Insurance Development Fund as at 31 December of the preceding year after meeting all financial obligations stipulated for the Fund by the Act.

“The Fund shall be used for the purpose of resolving distress and insolvencies of licensed insurers or reinsurer and payment of claims admitted by or allowed against a licensed insurer or reinsurer which remains unpaid by reason of insolvency or cancellation of the licence of the insurer or reinsurer.

“The objectives of these guidelines are to: Ensure protection of policyholders and beneficiaries covered under an insurance policy; Ensure timely and accurate collection of contributions to the Fund; Establish sound management and investment practices for the Fund; Provide procedures for disbursement and recovery of loans from the Fund; Promote transparency, accountability, and governance in the administration of the Fund.”